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SINGAPORE - Middle East spot crude prices are climbing on expectations of tighter supplies ahead of peak fuel demand in the northern summer, squeezing Asian refiners' margins and prompting them to secure supplies from other regions, traders and analysts said.
Middle Eastern crude benchmarks Oman, Dubai and Murban have recovered in April back to early March levels after the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, caught the market off guard by announcing further output cuts from May to the rest of the year.
State oil giant Saudi Aramco also unexpectedly raised official selling prices (OSPs) in May, making the bulk of Asia's term purchases more expensive even as it fully met Asian refiners' crude requirements.
Some refiners turned to the spot market for more oil and pushed up prices for sour grades from Qatari al-Shaheen, Abu Dhabi's Upper Zakum, Das and Murban, traders said.
Firm demand from Asian refiners pushed up the May term price of Qatari al-Shaheen crude to $2.37 a barrel over Dubai quotes, up from about $2.01 a barrel in the previous month, traders said, after Malaysia's Petronas and PetroChina were awarded cargoes in a tender.
The al-Shaheen price is closely watched by the market as a bellwether for medium sour grades.
Spot premiums for June-loading Abu Dhabi's Upper Zakum, Das and Murban against Dubai quotes rose about $1 a barrel from the previous month.
Some Chinese and South Korean refiners have nominated 450,000 barrels per day (bpd) less crude from Saudi Aramco in May than their contractual volume because of high prices, consultancy Energy Aspects said in a note.
Rising crude prices are eating into refiners' margins, with gasoil and gasoline cracks falling 28% and 23%, respectively, so far this month.
A couple of refiners in China and South Korea have bought U.S. Mars crude for May loading to replace Middle East supplies, trading sources said.
That drove spot Mars crude premiums up to about $4.50 a barrel to Dubai quotes for cargoes delivered to Northeast Asia in June, up from premiums of about $3.50 a barrel a month earlier, they said.
(Reporting by Muyu Xu; Editing by Florence Tan and Kim Coghill)